Informist, Tuesday, Nov 28, 2023

By Vaishali Tyagi

MUMBAI – The rupee ended largely steady against the dollar today as dollar sales by state-owned banks, likely on behalf of the Reserve Bank of India, offset the impact of dollar purchases on behalf of importers, dealers said. 

After moving in a narrow range of 7 paise throughout the day, the rupee settled at 83.3325 a dollar today, against Friday's close of 83.3675 a dollar.

Today, the rupee opened steady against the dollar as demand for dollars from importers offset the impact of a fall in the dollar index to a near three-month low in early trade today.

The dollar index touched a three-month low of 103.07, supporting the Indian currency. But its positive effect on the rupee was offset by importers' dollar demand. Heavy demand for the greenback by importers likely prompted the central bank to intervene in the market by selling the dollars through some state-owned banks. 

The dollar index fell on weaker-than-expected US new home sales data. New home sales dropped 5.6% to a seasonally adjusted annual rate of 679,000 units in October, the Commerce Department said on Monday, below the 723,000 units estimated by economists in a Reuters poll. The sales in September were revised lower to 719,000 units from the previously reported 759,000 units.

The dollar index also declined due to market participants' growing expectations that the US Federal Reserve may start cutting interest rates in the first half of next year. According to the CME FedWatch tool, Fed fund futures traders see a 25% chance that the Fed could begin cutting rates as early as March. The expectation of a rate cut in May is 45%.

At 1618 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.22. It was 103.20 on Monday, and 103.42 on Friday.

The rupee was weighed down by dollar purchases on behalf of oil and other importers shortly after the trading session began, dealers said. The rupee fell to a low of 83.3925 a dollar during the day. 

Oil prices recovered slightly today with the Brent benchmark rising above $80 a barrel, buoyed by expectations that the Organization of Petroleum Exporting Countries and allies may deepen and extend output cuts due to concern over softer global demand. The Organisation is supposed to meet virtually on Thursday to discuss output for the next year. 

At 1622 IST, the January contract of Brent crude oil on the Intercontinental Exchange was trading at $80.80 a barrel, against $80 a bbl on Monday. It was at $80.58 a bbl on Friday.

The banks persistently sold the greenback, likely on behalf of the RBI, which limited losses for the Indian unit, dealers said. The central bank likely sold dollars around 83.39 a dollar level to prevent a runaway depreciation of the Indian currency, they said. 

"The strong dollar demand continued, and the RBI was there at some levels," said a dealer with a state-owned bank. "But it is tough to gauge now that till where they (RBI) will hold the rupee."

Some banks sold the greenback for foreign fund inflows into domestic equities, which also supported the rupee, dealers said. Today, the Nifty50 and the Sensex ended 0.5% and 0.3% higher, respectively. 

FORWARDS

Premiums on one-year dollar/rupee forwards ended at a two-week low today despite a fall in US Treasury yields, as state-owned and foreign banks sold dollars for forward delivery, dealers said.

Dealers said banks sold dollars for forward delivery for the funding needs of their overseas branches ahead of the end of the calendar year. 

US Treasury yields fell on Monday after the weaker-than-expected home sales data. The fall in yields was also because investors expect that the US Federal Reserve may be done with the rate hike cycle and may opt for rate cuts in the first half of next year.

Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.

Some dealers said banks sold dollars for forward delivery, noting some arbitrage between onshore forwards and offshore non-deliverable forward rates, dealers said. 

The premium on the one-year, exact-period dollar/rupee forward contract was at 127.34 paise, against 131.91 paise on Friday. On an annualised basis, the premium was at 1.52%, against the previous close of 1.58%. 

OUTLOOK

On Wednesday, the rupee will take cues from movement in the dollar index and crude oil prices, dealers said. 

"Rupee is expected in a range of 83.25 to 83.50 tomorrow as market awaits US consumer confidence and PCE price index a data closely watched by FED for inflation purpose apart from US GDP this month," said Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP. 

Dealers expect the RBI to continue selling dollars to prevent the rupee from runaway depreciation.

Dealers have pegged key technical support for the local currency at 83.50 a dollar. During the day, the rupee is seen in the range of 83.10-83.50 a dollar.

India Rupee - World FX: Australian dollar up ahead of policy meet

MUMBAI – The Australian dollar strengthened 0.2% against the dollar ahead of the Reserve Bank of Australia's policy meeting on Dec 5. The rate-setting panel of the Australian central bank is expected to keep the benchmark interest rate steady.

However, Australia’s retail sales, a major indicator of consumer spending in the country, fell 0.2% on month in October, according to data published by the Australian Bureau of Statistics today. The data came in much weaker than the market's expectation of an increase of 0.1%. In September, retail sales had risen 0.9%.

The Japanese yen rose 0.1% against the US unit. The Canadian dollar fell 0.1% against the greenback on a fall in crude oil prices as Canada is a major exporter of oil to the US. The January contract for West Texas Intermediate crude was down 0.9% on Monday.

The pound sterling and the euro remained largely flat against the dollar.

The dollar index fell after weaker-than-expected US new home sales data. New home sales dropped 5.6% to a seasonally adjusted annual rate of 679,000 units last month, the Commerce Department said on Monday. This was below the estimate of 723,000 units, according to a poll of economists by Reuters. September's sales pace was also revised lower to 719,000 units from the previously reported 759,000 units.

At 1510 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.21. It was 103.20 on Monday, while on Friday it was 103.42. It fell to a near three-month low of 103.07 earlier today.

Investors now await the US Jul-Sep GDP figures, due on Wednesday, and the Personal Consumption Expenditures price index, due on Thursday, which is the Federal Reserve's preferred inflation gauge. Market participants are also eyeing a speech by Federal Reserve Chair Jerome Powell on Friday.  (Vaishali Tyagi)

India Rupee: Premiums fall as banks sell dollars for fwd delivery

NEW DELHI – Despite a decline in US Treasury yields, premiums on dollar/rupee forwards fell as state-owned and foreign banks sold dollars for forward delivery, dealers said.

Dealers said banks sold dollars for forward delivery for the funding needs of their overseas branches ahead of the end of the calendar year. 

"I think there is a lot of dollar demand and outflows in the market till mid-December, so you can expect this to continue," said a dealer with a private bank. 

US Treasury yields fell on Monday after a weaker-than-expected report on the housing market. The fall in yields was also because investors expect that the US Federal Reserve may be done with the rate hike cycle and may opt for rate cuts in the first half of next year.

Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries. According to the CME FedWatch tool, 43.3% of Fed Funds futures traders expect the US Federal Open Market Committee to begin cutting rates in May.

Some dealers said banks sold dollars for forward delivery, noting some arbitrage between onshore forwards and offshore non-deliverable forward rates, dealers said. 

"There is lots of arbitrage also coming in the near tenure of forwards, which has created additional near receiving pressure," said a dealer with another private bank. 

At 1430 IST, the premium on the one-month dollar/rupee contract was 4.96 paise, against 5.25 paise on Friday. On an annualised basis, the premium was at 0.66%, against the previous close of 0.77%. 

Market participants see strong technical support for the one-year forward premium at 1.50%. 

At 1430 IST, the premium on the one-year, exact-period dollar/rupee forward contract was at 128.60 paise, against 131.91 on Friday. On an annualised basis, the premium was at 1.53%, against the previous close of 1.58%. (Pratiksha)

India Rupee: Steady as RBI's likely dlr sales offset importers' buys

MUMBAI – The rupee moved in a tight range today, as dollar sales by state-owned banks, likely for the Reserve Bank of India, offset the impact of banks' dollar purchase for importers, dealers said.

"Some outflows (of dollars) are there; importers are buying (dollars). They (RBI) are gradually letting it (rupee) go," said a dealer with a private bank.

The rupee moved in a range of 4 paise so far today, between 83.3550 and 83.3925 a dollar.

In early trade, the dollar touched a three-month low, which supported the Indian currency. But its positive effect on the rupee was offset by importers' dollar demand. Heavy demand for the greenback by importers likely prompted the central bank to intervene in the market by selling the greenback through some state-owned banks.

The dollar index fell after weaker-than-expected US new home sales data. New home sales dropped 5.6% to a seasonally adjusted annual rate of 679,000 units last month, the Commerce Department said on Monday, below the estimate of 723,000 units, according to a poll of economists by Reuters. September's sales pace was revised lower to 719,000 units from the previously reported 759,000 units.

At 1230 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.22. It was 103.20 on Monday, while on Friday it was 103.42. It fell to a near three-month low of 103.07 earlier today. 

For the rest of the day, the rupee is seen in a range of 83.10-83.40 against the dollar. Immediate key technical support is pegged at 83.50 a dollar.  (Sourabh Kumar)

India Rupee - Asia FX: Most units up as dollar eases on weak US data

MUMBAI – Most Asian currencies were up against the dollar as the greenback fell on the back of weaker-than-expected US new home sales data. 

The US new home sales dropped 5.6% to a seasonally adjusted annual rate of 679,000 units in October, below the 723,000 units estimated by economists polled by Reuters. September's sales pace was revised lower to 719,000 units from the previously reported 759,000 units, data released on Monday showed.

The dollar index also fell due to market participants' growing expectations that the Federal Reserve may start cutting interest rates in the first half of next year. According to the CME FedWatch tool, Fed fund futures traders see a 25% chance that the Fed could begin cutting rates as early as March. The expectation of a rate cut in May is 45%.

At 1000 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.17. It was 103.20 on Monday, and 103.42 on Friday. It fell to a near three-month low of 103.07 earlier today.

The South Korean won rose 0.9% against the dollar, the most amongst the gainers, ahead of the Bank of Korea's monetary policy review on Thursday, where it is widely predicted to leave the interest rates unchanged.

The Thai Baht and the Taiwan dollar rose 0.4% each against the greenback. (Kabir Sharma)

India Rupee: Steady; dlr demand from importers offsets weak dlr index

MUMBAI – The rupee was largely steady against the dollar as demand for dollars from importers offset the impact of a fall in the dollar index to a near three-month low in early trade today, dealers said.

"It (rupee) opened at around 36 level (83.36), but the buying (of dollars) came, which is putting pressure on it, and also, the rupee is going differently than other currencies. So not much is expected," said a dealer at a state-owned bank.

Some dealers speculated that the Reserve bank of India intervened through dollar sales to prevent runaway depreciation in the rupee amid the strong dollar demand.

The dollar index fell due to weaker-than-expected US new home sales data. New home sales dropped 5.6% to a seasonally adjusted annual rate of 679,000 units last month, the Commerce Department said on Monday, below the estimate of 723,000 units, according to economists polled by Reuters. September's sales pace was revised lower to 719,000 units from the previously reported 759,000 units.

Market participants' growing expectations that the US Federal Reserve may start cutting interest rates in the first half of next year also weighed on the dollar index. According to the CME FedWatch tool, Fed fund futures traders see a 25% chance that the Fed could begin cutting rates as early as March. The expectation of a rate cut in May is 45%.

At 0945 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.17. It was 103.20 on Monday, while on Friday it was 103.42. It fell to a near three-month low of 103.07 earlier today. 

Dealers see immediate key technical support for the rupee at 83.50 a dollar. The rupee is seen at 83.10-83.40 against the dollar during the day. (Sourabh Kumar)

India Rupee: Expected range for rupee - Nov 28

MUMBAI – Following are the expected support and resistance levels for the rupee today, as forecast by leading banks and brokerages in an Informist poll:

(Sourabh Kumar)

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Saji George Titus

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